Sense of gloom
It must be bad. Kevin Rudd is cancelling a foreign trip.
The Australian Prime Minister was supposed to be in Davos, Switzerland, this week attending the , but instead he will remain, for the most part, at home dealing with the world economic downturn, or the GFC (standing for Global Financial Crisis) as he prefers to call it.
There's a back to school/back to work feel in the air, and the thinking in the prime minister's office is probably that it would have looked bad for Kevin Rudd to head off to the talkfest in Europe, especially after all the criticism that he already spends too much time outside of the country. (Though he will attend the Pacific summit in Papua New Guinea, where is topping the agenda).
The economic outlook for Australia has worsened significantly since the run-up to Christmas, fuelling speculation about whether the government will introduce a second stimulus package by the end of the month.
Kevin Rudd has already announced a $A4 billion stimulus plan for the building industry, with the aim of safeguarding 50,000 construction jobs.
What impact the first stimulus package had - a pre-Christmas $A1000 hand-out to low income earners, carers, and pensioners - is a matter of ongoing contention.
There's evidence to suggest that many Australians used the money to pay off credit card bills rather than generate new spending. A survey conducted by the found that most recipients used the money to ease their debt.
There's other evidence to suggest that the money did not have as much of a stimulative impact as the government would have liked.
The state of Victoria, for instance, saw record pokie (gaming machine) takings in December, which anti-pokie campaigners blame on the government's pre-Christmas cash injection.
Adding to the sense of gloom, the holiday season has seen a headline-grabbing report from a highly-regarded consultancy, , which predicted that the Australian economy would be certain to go into recession and that New South Wales, the country's most populous state, was already in one.
It said that the resources-fuelled boom was unwinding "scarily fast", and raised the spectre of "the sharpest deceleration that Australia's economy has ever seen".
The slowdown in China, Australia's leading trading partner, is the main problem, the report said, and the slackening demand for Australian minerals and resources will have a major impact on the federal budget, since corporate profits are so closely allied with commodities prices.
Access Economics said the federal budget was "buggered".
has already announced the closure of its Ravensthorpe nickel mine in the once-booming Western Australia, and said it may have to suspend operations at the Yabulu nickel refinery because of the collapse in the price of nickel.
In November, Western Australia's unemployment jumped more than any of the country's other states to 3% - although it still remains below the national average.
If Western Australia is in trouble, then you can be sure other states and territories, which do not benefit to the same extent from mineral deposits, will be experiencing it tough, as well.
Australia seems certain to experience an export slump, given that all ten of its major trading partners - in order, China, Japan, US, South Korea, Singapore, UK, New Zealand, Thailand, Germany, Malaysia - are either in recession or on the verge of it.
As we've noted before, Australia managed to avoid recession during the Asian financial crisis in 1997, and the dotcom bust in 2000. But the odds of it avoiding a recession this time round seem to be receding with every new report, confidence survey or set of economic statistics.
UPDATE: As we've reported , Prof Mick Dodson, the indigenous leader, has been made Australian of the Year, and has immediately sparked controversy by calling for a national conversation on whether Australia Day should be celebrated on January 26th, which marks the arrival of the British first fleet into Sydney Cove.
As Professor Dodson points out, there are many Aborigines who look on it as "Invasion Day".
There are some lively exchanges of views and . I would love to hear yours.
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